2002 (4) TMI 788 - HC - Companies Law

Summary

Issues:
- Interpretation of settlement agreement for valuation of shares
- Enforcement of Company Law Board order under section 634A
- Validity of the settlement agreement and obligations of the parties

Interpretation of Settlement Agreement for Valuation of Shares:
The case involved an appeal under section 10F of the Companies Act, 1956 against an order passed by the Company Law Board. The respondent had filed a petition under sections 397-398 of the Act, challenging the company's proposal to issue shares. A settlement was reached for the sale of shares, with valuation to be determined by Price Waterhouse and Co. Later, the valuer was changed to S.R. Batliboi & Co., whose valuation report was rejected by both parties. The Board found that the settlement agreement required the sale and purchase of shares, and parties could not raise objections contrary to the settlement's intent. The issue remaining was the fair price determination of shares.

Enforcement of Company Law Board Order under Section 634A:
The appellant contended that the order dated 28-5-1998 was not a decree and, therefore, the application under section 634A was not maintainable. The respondent argued that section 634A allowed enforcement of Board orders like decrees. The Court held that the order could be enforced under section 634A, rejecting the appellant's argument that the order was facilitatory and not final. The Madras High Court's judgment in a similar case was cited to support the enforceability of the order.

Validity of Settlement Agreement and Obligations of the Parties:
The settlement agreement's clause 5 prevented raising technical objections against the settlement's intent. The Court emphasized that parties were bound by the settlement terms, and attempting to avoid obligations would be unjust. The appellant's attempt to avoid complying with the settlement terms was likened to attempting fraud on the tribunal. The Court dismissed the appeal, stating that the obligations imposed by the settlement agreement must be upheld, and technical objections contrary to the settlement's intent were impermissible.